BAT Says $200-M Investment Hinges on PHL Sin Tax Reforms

Source from:  GMA News 03/13/2012

British American Tobacco, maker of Lucky Strike cigarette brand, is ready to invest $200 million in the Philippines over five year once the six-tax bill is in place, the company said in a statement Monday. "Currently the excise system is a barrier to entry of new players. New brands, whether locally produced or imported, are taxed higher than old brands. This is what has deterred us in the past and fixing this is a pre-requisite for this kind of major investment," said BAT general manager in the Philippines Jim Lafferty. "The Philippines is an important market to BAT, as with any other multinational corporation who wants to have a strong presence in the Asia Pacific. We believe that the Philippines is presently on the right track and offers outstanding potential. It can become one of the biggest economies in the next decade. We want to be part of that growth," the tobacco executive added. The investment would cover the development, production, distribution, and marketing of BAT brands in the country, he said. "And, to achieve this we must invest heavily in the Philippine market, across all areas including investing in people to build a world-class organization," Lafferty noted. Sin tax reforms reflect a level playing field in the industry, which the Philippine government can soon implement, according to the BAT executive, saying they support the Aquino administration's push for the enactment of the Sin Tax Reform bills in congress. "There are several means to leveling the playing field and we are supportive of those options. All we want is a chance to fairly compete," he said. What is happening is the best thing that can ever happen to the Philippine tobacco industry, which opens up the market to competition, according to BAT. "Right now what you have is a monopoly. The historic excise system essentially supports the monopoly. If there are more players, the stakeholders stand to benefit more," Lafferty said. Even without a local presence in the Philippines, Lafferty noted that BAT bought more than 1 million kgs of tobacco leaf from Philippine farmers last year. "That was when Philippines was not even in our operations radar. Imagine what we can do, as we know more of the market, and we have a significant presence here?" he said. In addition to taxes that will accrue to government coffers, the $200-million investment would create jobs and income opportunities, the company said. "This is classic open market practices at work. The $200 million would follow as a direct result of establishing a level playing field. And we believe this is only the start of the new levels of investment to flow in once sin taxes are properly reformed," said Lafferty. Enditem